Severance Agreement Template: Pay, Release and Benefits

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Severance Agreement Template

This Severance Agreement (“Agreement”) is made effective as of [Date], by and between:

Employer: [Company Name]

Address: [Company Address]

and

Employee: [Employee Full Name]

Address: [Employee Address]

Together referred to as the “Parties.”

1. Termination of Employment

The Employee’s employment with the Company will end effective [Termination Date]. This Agreement sets forth the terms governing such termination.

2. Severance Payment

The Company agrees to pay the Employee severance compensation in the amount of $[Amount], less applicable taxes and withholdings, payable in [lump sum/installments] within [X] days following the Effective Date of this Agreement.

3. Benefits Continuation

The Employee shall be entitled to continuation of group health insurance benefits under [COBRA/Applicable Law] for a period of [X months], provided the Employee elects such coverage. Other benefits shall cease as of the Termination Date unless otherwise stated herein.

4. Accrued Compensation

The Company shall pay the Employee all earned salary, unused vacation, and other accrued but unpaid compensation through the Termination Date, subject to normal payroll deductions.

5. Return of Company Property

The Employee agrees to return all company property, including keys, access cards, equipment, documents, and electronic files, no later than [Date].

6. Confidentiality and Non-Disclosure

The Employee agrees to maintain confidentiality regarding Company trade secrets, proprietary information, and any sensitive matters learned during employment, both during and after employment.

7. Non-Disparagement

The Employee agrees not to make statements, written or verbal, that may disparage the Company, its officers, employees, or reputation. The Company likewise agrees not to disparage the Employee.

8. Release of Claims

In exchange for the severance benefits provided herein, the Employee releases and forever discharges the Company and its affiliates from all claims, liabilities, or actions arising out of the Employee’s employment or termination thereof, except those rights that cannot be waived by law.

9. References and Verification

The Company agrees to provide neutral employment verification limited to dates of employment and position held unless otherwise required by law.

10. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of [State/Country].

11. Entire Agreement

This document constitutes the full understanding between the Parties regarding severance and supersedes any prior agreements, verbal or written. Amendments must be in writing and signed by both Parties.

IN WITNESS WHEREOF

The Parties hereto have executed this Severance Agreement as of the Effective Date.

Employer: ___________________________

Name:

Title:

Date:

Employee: ___________________________

Name:

Date:

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Severance Agreement Template: Pay, Release and Benefits

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Severance Agreement Template — quick answers

Reviewed July 2026 Free download, PDF & DOCX

What is a Severance Agreement?

A Severance Agreement is a legally binding contract between an employer and a departing employee that defines termination terms, severance payments, continuation of benefits, and obligations after employment ends.

Why is a Severance Agreement important?

It provides clarity, prevents disputes, and protects both parties. For employers, it secures release of claims and ensures confidentiality. For employees, it guarantees compensation, benefits, and fair treatment during separation.

When should you use a Severance Agreement?

Use it when terminating an employee, during layoffs, restructurings, or mutual separations — especially for mid- to senior-level employees or where additional compensation is offered.

What should it include?

It should specify severance pay, benefits continuation, final paycheck details, confidentiality, non-disparagement, return of company property, release of claims, and governing law.

Is a Severance Agreement mandatory?

Not always. It is typically offered at the employer’s discretion, unless required by an employment contract, collective bargaining agreement, or local law.